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Soft consumer spending could see interest rates stay on hold until as late as Christmas, according to National Australia Bank.
NAB’s latest monthly business survey found conditions in retail have fallen to worryingly low levels, while manufacturing, construction and wholesale are also poor.
Alan Oster, NAB group chief economist, said the severe weakness in retail could force the RBA to push its next rate hike back until December.
“We expect the next 25 basis point rise in the cash rate to be deferred until December, when growth momentum becomes more apparent and the labour market tightens significantly,” Mr Oster said.
“The final 25 basis point rate hike is expected to be pushed back until May 2012.”